Can Anything Save Microsoft’s Surface?

Microsoft is apparently planning a 7-inch Surface tablet, according to a new report in The Wall Street Journal. While the newspaper’s sources for the information remain unnamed, producing a smaller device seems like a logical move for the company: other 7-inch tablets—including Google’s Nexus 7, Apple’s iPad Mini, and Amazon’s Kindle Fire—have enjoyed considerable sales success over the past few quarters, suggesting there’s a market hunger for the category.

A 7-inch model would also represent yet another attempt by Microsoft to transform its Surface franchise from an also-ran into a powerhouse. Despite last October’s massive launch campaign—which featured everything from television ads to a “pop up” store in New York City’s Times Square—Surface failed to become the “iPad killer” that Microsoft executives probably hoped; by the end of 2012, analyst estimates of Surface sales ranged from 500,000 to one million. Compare that to the iPad, which sold 14 million units that same quarter.

Microsoft’s first Surface tablet ran Windows RT, a variant on Windows 8 for ARM-based hardware. The ARM chip architecture powers a large percentage of mobile devices currently on the market, including the iPad. But Windows RT’s inability to run apps built for previous versions of Windows (which are based on x86 architecture) may have alienated a significant subset of users who wanted to run old software on the new system. Fortunately, the next version of Surface ran the “full” Windows 8 on an Intel chip—but that model also failed to set the tech world ablaze with envy and desire.

This isn’t the best situation for Microsoft, given how it positioned Surface as a flagship device—something that alienated many of its manufacturing partners, which haven’t exactly been flooding the market with their own Windows 8 tablets.

So what can Microsoft do? The company is certainly known for playing the long game; it could simply plow forward with promoting Surface, hoping that—over the course of years—its market-share eventually creeps up to a respectable level. With enough money poured into advertising (and enough third-party developers actually building apps for Windows RT and Windows 8), Microsoft could even achieve something that resembles success—or at least not total failure. But tech isn’t an industry that tolerates zombie projects for lengthy periods of time; it’s unlikely that Surface could fail to sell for many quarters before someone decided to pull the plug.

Surface is also curtailed by Windows 8’s larger failure to reignite the anemic PC market. Research firm IDC recently estimated worldwide PC shipments in the first quarter of 2013 at 76.3 million units, down 13.9 percent from the same quarter in 2012, and partially blamed the operating system for that poor performance.

“At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market,” Bob O’Donnell, IDC Program Vice President, Clients and Displays, wrote in a statement. “While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices.”

In light of that, Microsoft’s strategy for Surface might need to be more radical: revamp Windows 8 into a form that more customers “get.” Indeed, Microsoft might already be headed in this direction. For months, rumors have circulated that the company plans to speed up its pace of Windows upgrades, which would allow it to iterate at the same speed as rival operating systems such as iOS, Android, and Chrome OS. But even that might not be enough: Microsoft needs to work with its hardware partners to create a Surface that’s sleeker, lighter, and more battery-efficient—just some of the complaints leveled against the device in the months since its release.

If a 7-inch Surface is indeed in development, it could give Microsoft an entry into a lucrative part of the tablet market; but if the company wants its flagship Windows 8 device to become a dominant player, it could take a rethink of its whole strategy. (Also, how would the flexible cover/keyboard, the Surface’s defining accessory, work if the device only measured 7 inches?)

 

Image: Microsoft

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